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Title: If interest expense lowers taxes, why does the WACC not decrease indefinitely with the addition of ... Post by: Rickos on Jun 1, 2017 If interest expense lowers taxes, why does the WACC not decrease indefinitely with the addition of more debt?
A) The tax shield effect of debt will result in a lower cost of equity. B) Increasing debt too much can result in a greater likelihood of firm failure (financial distress). C) A firm's common stock price will not be affected by the amount of debt a firm uses. D) Too much common equity increases the probability of bankruptcy. Title: Re: If interest expense lowers taxes, why does the WACC not decrease indefinitely with the addition ... Post by: Lutional on Jun 1, 2017 Content hidden
Title: Re: If interest expense lowers taxes, why does the WACC not decrease indefinitely with the addition of ... Post by: Rickos on Jul 5, 2017 I really appreciate this 8-)
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